Unemployed, not in school: Young people bearing brunt of economic downturn

A Wellington mother who has watched her now-21-year-old live on the benefit for the past three years says her concern about the situation comes and goes.

“Mostly I’m happy for them because they’ve become a happy young adult with friends, interests, volunteer roles, and a sense of belonging to their community,” she said.

“But ultimately I really want them to get into something engaging and enriching. I want them to have a pathway to independence, to going flatting.”

The woman, whom RNZ has agreed not to identify, said her child left school at 16 because of anxiety and neurodiversity.

“We tried health school, gateway programme, and a polytechnic course, but none of it worked out, it was a really stressful few years.

“Then it felt like we all needed some time to decompress and take the pressure off. They’d developed a self-image as someone who can’t study, and this has been really hard to undo. This is a bit frustrating because they’re super smart.”

Data shows a growing number of young people are in this position.

In the year to March, 12.4 per cent of people aged 15 to 24 were not in employment, education or training (NEET), and 14.2 percent of women. That was up from 10.9 percent in total in March 2023, and 11.5 percent for women.

For those aged 20 to 24, the rate was higher – more than 18 percent of women in this age bracket were NEET, up 27 percent year-on-year.

Northland had the highest NEET rate, at 16.3 percent of people aged 15 to 24, followed by Bay of Plenty, at 16.2 percent.

NZ Council of Trade Unions (CTU) policy director Craig Renney said people in this situation were potentially facing a “huge challenge” through the rest of their lives. There could be wage and employment scarring, he said.

“The longer they spend NEET, the worse the labour market outcomes tend to be for those people.”

He said NEET rate increases often foreshadowed other employment changes.

“It’s a sign of slack emerging in the labour market.”

He said the increase for women could reflect the industries they had typically been employed in. “We know construction is struggling, manufacturing is struggling but perhaps not as much as high street retail. Perhaps not as much as the more female-dominated industries.”

Another Wellington mother said her teenager had been looking for an apprenticeship since he finished a course in November.

“I think if he doesn’t find something soon he’ll lose confidence and stay in low paid work for quite a while.”

Renney said apprenticeships were often shed during downturns.

“Then when the upswing comes as inevitably as the downswing and we suddenly need apprentices, we don’t have any.”

He said more should be done to help NEET young people.

“Do they stay in-country? If they’ve got skills and not in education, employment or training they might say ‘stuff this I’m going to Oz’ and they don’t come back. That’s a permanent loss on that side.

“The longer you’re out of employment the harder it is to get back in, that’s why interventions at that point in life are so vital.”

Infometrics chief executive Brad Olsen said the increase in the number of NEETs was worrying.

“Half of the increase in unemployment so far has come from young people. It’s not unusual given how the labour market moves but it does make me worry.”

He said there was also a risk that some young people had dropped out of school when the labour market was very tight, during the pandemic, and were now in a tricky position.

“There will be a number of young people out there who got employment during the pandemic because there were such good job offers for them, they might not have carried on with school or further study which was good in the short term but if they don’t have any transferable skills [and are now out of work] they might find it even more difficult to get back in.”

Westpac chief economist Kelly Eckhold said the increase in the NEET rate had started rising from the beginning of 2023, which was in line with a wider increase in unemployment.

For teenagers specifically, employment rates and average hours worked were the highest on record in the late 1980s, Stats NZ said.

At that point, half of all teenagers were employed and on average working full-time.

The rate declined through the 1990s and into the 2000s. After the global financial crisis, teenage employment remained historically low until the last couple of years.

“Employment rates for teenagers from 2022 to 2024 rose from the previous decade, but average hours per employed youth remained low. Over this period, employment rates for teenagers rose above 40 percent, while average hours usually worked remained around 21 to 23 per week.”